Edgar Filing: JONES LANG LASALLE INC

form10q.htm

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2012

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission File Number 1-13145

Jones Lang LaSalle Incorporated

(Exact name of registrant as specified

in its charter)

Maryland

(State or other jurisdiction of incorporation or organization)

36-4150422

(I.R.S. Employer Identification No.)

200 East Randolph Drive, Chicago, IL		60601
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 312-782-5800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer x	Accelerated filer o

	Non-accelerated filer (Do not check if a smaller reporting company) o	Smaller reporting compan y o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

The number of shares outstanding of the registrant’s common stock (par value $0.01) as of the close of business on October 24, 2012 was 44,047,380.

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Part I	Financial Information

Item 1.	Financial Statements	3

	Consolidated Balance Sheets as of September 30, 2012 (Unaudited) and December 31, 2011	3

	Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2012 and 2011 (Unaudited)	4

	Consolidated Statement of Changes in Equity for the Nine Months Ended September 30, 2012 (Unaudited)	5

	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2012 and 2011 (Unaudited)	6

	Notes to Consolidated Financial Statements (Unaudited)	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32

Item 4.	Controls and Procedures	33

Part II	Other Information

Item 1.	Legal Proceedings	33

Item 5.	Other Information	33

Item 6.	Exhibits	36

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Part I

Financial Information

Item 1.

Financial Statements

JONES LANG LASALLE INCORPORATED

Consolidated Balance Sheets

Septmember 30, 2012 (Unaudited) and December 31, 2011

($ in thousands, except share data)

	September 30,
	2012			December 31,
Assets	(Unaudited)			2011
Current assets:
Cash and cash equivalents	$	125,730			184,454
Trade receivables, net of allowances of $24,523 and $20,595		858,594			907,772
Notes and other receivables		99,074			97,315
Warehouse receivables		54,140			-
Prepaid expenses		62,513			45,274
Deferred tax assets		50,269			53,553
Other		18,770			12,516
Total current assets		1,269,090			1,300,884

Property and equipment, net of accumulated depreciation of $342,857 and $336,377		248,036			241,415
Goodwill, with indefinite useful lives		1,816,944			1,751,207
Identified intangibles, net of accumulated amortization of $108,083 and $99,801		47,745			52,590
Investments in real estate ventures		295,525			224,854
Long-term receivables		56,881			54,840
Deferred tax assets, net		183,809			186,605
Other		135,980			120,241
Total assets	$	4,054,010			3,932,636

Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$	373,811			436,045
Accrued compensation		480,956			655,658
Short-term borrowings		30,775			65,091
Deferred tax liabilities		6,095			6,044
Deferred income		86,296			58,974
Deferred business acquisition obligations		184,006			31,164
Warehouse facility		54,140			-
Other		97,301			95,641
Total current liabilities		1,313,380			1,348,617

Noncurrent liabilities:
Credit facility		572,000			463,000
Deferred tax liabilities		7,646			7,646
Deferred compensation		16,087			10,420
Pension liabilities		12,990			17,233
Deferred business acquisition obligations		106,185			267,896
Minority shareholder redemption liability		18,585			18,402
Other		148,286			105,042
Total liabilities		2,195,159			2,238,256

Commitments and contingencies		-			-

Company shareholders' equity:
Common stock, $.01 par value per share, 100,000,000 shares authorized;44,043,059 and 43,470,271 shares issued and outstanding		440			435
Additional paid-in capital		926,114			904,968
Retained earnings		919,184			827,297
Shares held in trust		(7,599	)		(7,814	)
Accumulated other comprehensive income (loss)		14,834			(33,757	)
Total Company shareholders’ equity		1,852,973			1,691,129
Noncontrolling interest		5,878			3,251
Total equity		1,858,851			1,694,380
Total liabilities and equity	$	4,054,010			3,932,636

See accompanying notes to consolidated financial statements

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JONES LANG LASALLE INCORPORATED

Consolidated Statements of Comprehensive Income (Loss)

For the Three and Nine Months Ended September 30, 2012 and 2011

($ in thousands, except share data) (unaudited)

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2012			2011			2012			2011

Revenue	$	949,491			903,210		$	2,684,126			2,436,368

Operating expenses:
Compensation and benefits		622,360			602,473			1,752,804			1,608,051
Operating, administrative and other		235,370			207,517			701,731			613,687
Depreciation and amortization		19,089			22,835			58,710			60,500
Restructuring and acquisition charges		6,820			16,031			32,376			22,144
Total operating expenses		883,639			848,856			2,545,621			2,304,382

Operating income		65,852			54,354			138,505			131,986

Interest expense, net of interest income		(9,952	)		(9,667	)		(24,837	)		(27,218	)
Equity in earnings from real estate ventures		10,698			514			22,500			2,682

Income before income taxes and noncontrolling interest		66,598			45,201			136,168			107,450

Provision for income taxes		16,916			11,300			34,587			26,863
Net income		49,682			33,901			101,581			80,587

Net income attributable to noncontrolling interest		169			21			603			1,121
Net income attributable to the Company		49,513			33,880			100,978			79,466

Dividends on unvested common stock, net of tax benefit		-			-			(253	)		(236	)
Net income attributable to common shareholders	$	49,513			33,880		$	100,725			79,230

Basic earnings per common share	$	1.12			0.78		$	2.30			1.84
Basic weighted average shares outstanding		44,015,922			43,421,666			43,780,819			43,069,567

Diluted earnings per common share	$	1.10			0.76		$	2.25			1.79
Diluted weighted average shares outstanding		44,826,502			44,355,453			44,755,817			44,376,796

Other comprehensive income:
Net income attributable to the Company	$	49,513			33,880		$	100,978			79,466
Foreign currency translation adjustments		54,924			(63,332	)		48,591			(13,208	)
Comprehensive income (loss) attributable to the Company	$	104,437			(29,452	)	$	149,569			66,258

See accompanying notes to consolidated financial statements.

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JONES LANG LASALLE INCORPORATED

Consolidated Statement of Changes in Equity

For the Nine Months Ended September 30, 2012

($ in thousands, except share data) (unaudited)

	Company Shareholders' Equity
							Additional						Shares			Other
	Common Stock						Paid-In			Retained			Held in			Comprehensive			Noncontrolling		Total
	Shares			Amount			Capital			Earnings			Trust			Income ( Loss)			Interest		Equity
Balances at December 31, 2011		43,470,271		$	435			904,968			827,297			(7,814	)		(33,757	)		3,251	$	1,694,380

Net income		—			—			—			100,978			—			—			603		101,581

Shares issued under stock compensation programs		744,259			7			3,483			—			—			—			—		3,490

Shares repurchased for payment of taxes on stock awards		(171,471	)		(2	)		(11,557	)		—			—			—			—		(11,559	)

Tax adjustments due to vestings and exercises		—			—			3,438			—			—			—			—		3,438

Amortization of stock compensation		—			—			25,782			—			—			—			—		25,782

Shares held in trust		—			—			—			—			215			—			—		215

Dividends declared, $0.20 per share		—			—			—			(9,091	)		—			—			—		(9,091	)

Increase in amounts due to noncontrolling interest		—			—			—			—			—			—			2,024		2,024

Foreign currency translation adjustments		—			—			—			—			—			48,591			—		48,591

Balances at September 30, 2012		44,043,059		$	440			926,114			919,184			(7,599	)		14,834			5,878	$	1,858,851

See accompanying notes to consolidated financial statements.

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JONES LANG LASALLE INCORPORATED

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2012 and 2011

($ in thousands) (unaudited)

	Nine			Nine
	Months Ended			Months Ended
	September 30, 2012			September 30, 2011

Cash flows used in operating activities:
Net income	$	101,581			80,587
Reconciliation of net income to net cash provided by (used in) operating activities:
Depreciation and amortization		58,710			60,500
Equity in earnings from real estate ventures		(22,500	)		(2,682	)
Operating distributions from real estate ventures		7,996			555
Provision for loss on receivables and other assets		10,552			9,457
Amortization of deferred compensation		26,181			24,149
Accretion of interest on deferred business acquisition obligations		11,486			15,214
Amortization of debt issuance costs		3,233			3,307
Change in:
Receivables		48,300			(16,328	)
Prepaid expenses and other assets		(42,358	)		(5,754	)
Deferred tax assets, net		6,132			29,406
Excess tax benefit from share-based payment arrangements		(3,438	)		(17,524	)
Accounts payable, accrued liabilities and accrued compensation		(171,587	)		(222,062	)
Net cash provided by (used in) operating activities		34,288			(41,175	)

Cash flows used in investing activities:
Net capital additions – property and equipment		(54,837	)		(55,902	)
Business acquisitions		(26,190	)		(234,001	)
Capital contributions and advances to real estate ventures		(95,166	)		(65,684	)
Distributions, repayments of advances and sale of investments		40,636			19,424
Net cash used in investing activities		(135,557	)		(336,163	)

Cash flows from financing activities:
Proceeds from borrowings under credit facilities		1,372,684			1,264,753
Repayments of borrowings under credit facilities		(1,298,000	)		(870,100	)
Payments of deferred business acquisition obligations		(31,699	)		(162,639	)
Debt issuance costs		-			(2,630	)
Shares repurchased for payment of employee taxes on stock awards		(11,559	)		(30,194	)
Excess tax adjustment from share-based payment arrangements		3,438			17,524
Common stock issued under option and stock purchase programs		3,490			1,151
Other loan proceeds		13,282			-
Payment of dividends		(9,091	)		(6,753	)
Net cash provided by financing activities		42,545			211,112

Net decrease in cash and cash equivalents		(58,724	)		(166,226	)
Cash and cash equivalents, beginning of the period		184,454			251,897
Cash and cash equivalents, end of the period	$	125,730			85,671

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	9,080			8,730
Income taxes, net of refunds		50,031			53,834
Non-cash financing activities:
Deferred business acquisition obligations	$	3,831			143,526
Provision recorded for potential earn-out obligations		6,498			14,722

See accompanying notes to consolidated financial statements.

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JONES LANG LASALLE INCORPORATED

Notes to Consolidated Financial Statements (Unaudited)

Readers of this quarterly report should refer to the audited financial statements of Jones Lang LaSalle Incorporated (“Jones Lang LaSalle,” which may also be referred to as “the Company” or as “the firm,” “we,” “us” or “our”) for the year ended December 31, 2011, which are included in our 2011 Annual Report, filed with the United States Securities and Exchange Commission (“SEC”) and also available on our website (www.joneslanglasalle.com), since we have omitted from this report certain footnote disclosures which would substantially duplicate those contained in such audited financial statements. You should also refer to the “Summary of Critical Accounting Policies and Estimates” section within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in this quarterly report and within Item 7 of our 2011 Annual Report, and to Note 2, Summary of Significant Accounting Policies in the Notes to Consolidated Financial Statements in our 2011 Annual Report for further discussion of our significant accounting policies and estimates.

(1)	Interim Information

Our consolidated financial statements as of September 30, 2012 and for the three and nine months ended September 30, 2012 and 2011 are unaudited; however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the consolidated financial statements for these interim periods have been included. Certain prior year amounts have been reclassified to conform to the current year presentation.

Historically, our quarterly revenue and profits have tended to increase from quarter to quarter as the year progresses. This is the result of a general focus in the real estate industry on completing transactions by calendar-year-end while we recognize certain expenses evenly throughout the year. Our Investment Management segment generally earns investment-generated performance fees on clients’ real estate investment returns and co-investment equity gains when assets are sold, the timing of which is geared toward the benefit of our clients. Within our Real Estate Services (“RES”) segments, revenue for capital markets activities relates to the size and timing of our clients’ transactions and can fluctuate significantly from period to period. Non-variable operating expenses, which we treat as expenses when they are incurred during the year, are relatively constant on a quarterly basis. As such, the results for the periods ended September 30, 2012 and 2011 are not indicative of what our results will be for the full fiscal year.

(2)	Significant Accounting Policies

Warehouse Receivables and Facilities

In the first quarter of 2011, we acquired certain assets of Atlanta-based Primary Capital™ Advisors. This acquisition expands our capital market service offerings and allows us to better meet our clients’ needs through the origination, warehousing, sale and servicing of commercial mortgages as a Federal Home Loan Mortgage Corporation (Freddie Mac) Program Plus® Seller/Servicer. We originate mortgages based on contractual purchase commitments which are received from Freddie Mac prior to originating mortgages. Loans are generally funded by our warehouse facility at prevailing market rates. Loans are generally repaid within a one-month period when Freddie Mac buys the loans, while we retain the servicing rights. Upon surrender of control over the warehouse receivables, we account for the transfer as a sale.

We carry Warehouse receivables at the lower of cost or fair value based on the commitment price, in accordance with Accounting Standards Codification (“ASC”) 948, Financial Services—Mortgage Banking. At September 30, 2012, all Warehouse receivables included in the accompanying consolidated balance sheets were under commitment to be purchased. The commitment price is equal to our cost.

Through June 30, 2012, we maintained an open-end warehouse facility with Kemps Landing Capital Company, LLC to fund Warehouse receivables. On January 6, 2012, the Federal Housing Finance Agency announced a termination of Freddie Mac’s purchase commitment agreement with Kemps Landing effective June 30, 2012.

On July 1, 2012, we entered into an uncommitted warehouse facility with a third-party lender, with a maximum capacity of $85 million, to fund Warehouse receivables. This facility bears interest at LIBOR plus 2.5%. During the third quarter, we entered into a short-term agreement with the third-party lender whereby the capacity of the warehouse facility can be increased by $75 million upon establishment of a cash collateral account.

Mortgage Servicing Rights

We retain certain servicing rights in connection with the origination and sale of mortgage loans. We record mortgage servicing rights based on the fair value of these rights on the date the loans are sold. The recording of mortgage servicing rights at their fair value results in net gains, which we record as revenue in our consolidated statements of comprehensive income (loss). At September 30, 2012 and December 31, 2011, we had $3.6 million and $1.4 million, respectively, of mortgage servicing rights carried at the lower of amortized cost or fair value in Identified intangible assets on our consolidated balance sheets. We amortize servicing rights in proportion to and over the estimated period that net servicing income is projected to be received.

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We evaluate the mortgage servicing assets for impairment on an annual basis, or more often if circumstances or events indicate a change in fair value. There have been no instances of impairment during all periods presented. Mortgage servicing rights do not actively trade in an open market with readily available observable prices; therefore we determine the fair value of these rights based on certain assumptions and judgments that are Level 3 within the fair value hierarchy, including the estimation of the present value of future cash flows to be realized from servicing the underlying mortgages.

New Accounting Standards

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU’) No. 2011-05, “Presentation of Comprehensive Income.” ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in stockholders’ equity and requires an entity to present the components of net income and other comprehensive income either in a single continuous statement or in two consecutive statements. To meet the requirements of ASU 2011-05, we have presented other comprehensive income (loss) and its components in our consolidated statements of comprehensive income (loss) starting in 2012.

(3)	Revenue Recognition

We earn revenue from the following principal sources:

Transaction commissions;

Advisory and management fees;

Incentive fees;

Project and development management fees; and

Construction management fees.

We recognize transaction commissions related to leasing services and capital markets services as revenue when we provide the related service unless future contingencies exist. If future contingencies exist, we defer recognition of this revenue until the respective contingencies have been satisfied.

We recognize advisory and management fees related to property management services, valuation services, corporate property services, consulting services and investment management as income in the period in which we perform the related services.

We recognize incentive fees based on the performance of underlying funds’ investments, contractual benchmarks and other contractual formulas.

We recognize project and development management and construction management fees by applying the percentage of completion method of accounting. We use the efforts expended method to determine the extent of progress towards completion for project and development management fees and costs incurred to total estimated costs for construction management fees.

Construction management fees, which are gross construction services revenue net of subcontract costs, were $1.8 million and $2.0 million for the three months ended September 30, 2012 and 2011, respectively, and $5.0 million and $6.6 million for the nine months ended September 30, 2012 and 2011, respectively. Gross construction services revenue totaled $27.9 million and $29.4 million for the three months ended September 30, 2012 and 2011, respectively, and $84.9 million and $104.0 million for the nine months ended September 30, 2012 and 2011, respectively. Subcontract costs totaled $26.1 million and $27.4 million for the three months ended September 30, 2012 and 2011, respectively, and $79.9 million and $97.4 million for the nine months ended September 30, 2012 and 2011, respectively.

Included in our consolidated balance sheets were costs in excess of billings on uncompleted construction contracts of $8.8 million and $7.1 million in Trade receivables as of September 30, 2012 and December 31, 2011, respectively, and billings in excess of costs on uncompleted construction contracts of $3.0 and $4.1 million in Deferred income, respectively, as of September 30, 2012 and December 31, 2011.

Gross and Net Accounting: We follow the guidance of FASB Accounting Standards Codification (“ASC”) 605-45, “Principal and Agent Considerations,” when accounting for reimbursements received from clients. In certain of our businesses, primarily those involving management services, our clients reimburse us for expenses incurred on their behalf. We base the treatment of reimbursable expenses for financial reporting purposes upon the fee structure of the underlying contract.

Accordingly, we report a contract that provides a fixed fee billing, fully inclusive of all personnel and other recoverable expenses incurred but not separately scheduled, on a gross basis. When accounting on a gross basis, our reported revenue includes the full billing to our client and our reported expenses include all costs associated with the client. Certain contractual arrangements in our project and development services, including fit-out business activities, and in facility management, tend to have characteristics that result in accounting on a gross basis. In Note 4, Business Segments, we identify vendor and subcontract costs on certain client assignments in property and facilities management, and project and development services (“gross contract costs”), and present separately their impact on both revenue and operating expense in our RES segments. We exclude these costs from revenue and operating expenses in determining “fee revenue” and “fee based operating expenses” in our segment presentation.

We account for a contract on a net basis when the fee structure is comprised of at least two distinct elements, namely (1) a fixed management fee and (2) a separate component that allows for scheduled reimbursable personnel costs or other expenses to be billed directly to the client. When accounting on a net basis, we include the fixed management fee in reported revenue and net the reimbursement against expenses. We base this accounting on the following factors, which define us as an agent rather than a principal:

The property owner or client, with ultimate approval rights relating to the employment and compensation of on-site personnel, and bearing all of the economic costs of such personnel, is determined to be the primary obligor in the arrangement;

Reimbursement to Jones Lang LaSalle is generally completed simultaneously with payment of payroll or soon thereafter;

Because the property owner is contractually obligated to fund all operating costs of the property from existing cash flow or direct funding from its building operating account, Jones Lang LaSalle bears little or no credit risk; and

Jones Lang LaSalle generally earns no margin in the reimbursement aspect of the arrangement, obtaining reimbursement only for actual costs incurred.

The majority of our service contracts are accounted for on a net basis. Total costs incurred and reimbursed by our clients for service contracts that were accounted for on a net basis were $370.8 million and $354.2 million for the three months ended September 30, 2012 and 2011, respectively, and $1,123.6 million and $1,072.4 million for the nine months ended September 30, 2012 and 2011, respectively.

Contracts accounted for on a gross basis resulted in certain costs reflected in revenue and operating expenses of $71.7 million and $46.8 million for the three months ended September 30, 2012 and 2011, respectively, and $209.2 million and $143.6 million for the nine months ended September 30, 2012 and 2011, respectively.

Certain of our management services which provide for fixed fees inclusive of personnel and other expenses incurred were accounted for on a net basis in 2011. In 2012, these management services revenue and expenses are presented on a gross basis. For the three and nine months ended September 30, 2011, gross accounting for these management services would have added $18.7 million and $56.1 million, respectively, to both revenue and expense.

The presentation of expenses pursuant to all of these arrangements under either a gross or net basis has no impact on operating income, net income or cash flows.

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(4)	Business Segments

We manage and report our operations as four business segments:

The three geographic regions of Real Estate Services (“RES”):

(i)

Americas,

(ii)

Europe, Middle East and Africa (“EMEA”),

(iii)

Asia Pacific; and

(iv)

Investment Management, which offers investment management services on a global basis.

Each geographic region offers our full range of Real Estate Services, including agency leasing and tenant representation, capital markets and hotels, property management, facilities management, project and development management, energy management and sustainability, construction management, and advisory, consulting and valuation services.

The Investment Management segment provides investment management services to institutional investors and high-net-worth individuals.

Operating income (loss) represents total revenue less direct and indirect allocable expenses. We allocate all expenses to our segments, other than interest and income taxes, as nearly all expenses incurred benefit one or more of the segments. Allocated expenses primarily consist of corporate global overhead. We allocate these corporate global overhead expenses to the business segments based on the budgeted operating expenses of each segment.

For segment reporting, we show revenue net of gross contract costs in our RES segments. Excluding these costs from revenue and expenses in a “net” presentation of “fee revenue” and “fee-based operating expense” more accurately reflects how we manage our expense base and operating margins. See Note 3, Revenue Recognition, for additional information on our gross and net accounting. For segment reporting we also show Equity in earnings (losses) from real estate ventures within total segment revenue, since it is an integral part of our Investment Management segment. Finally, our measure of segment results also excludes restructuring charges and certain acquisition related costs.

The Chief Operating Decision Maker of Jones Lang LaSalle measures the segment results net of gross contract costs, with equity in earnings (losses) from real estate ventures, and without restructuring charges. We define the Chief Operating Decision Maker collectively as our Global Executive Committee, which is comprised of our Global Chief Executive Officer, Global Chief Operating and Financial Officer and the Chief Executive Officers of each of our reporting segments.

Summarized unaudited financial information by business segment for the three and nine months ended September 30, 2012 and 2011 is as follows ($ in thousands):

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Real Estate Services
Americas
Segment revenue:
Revenue	$	437,221			379,273			1,191,841			1,013,128
Equity in earnings (losses)		131			34			(77	)		2,666
Total segment revenue		437,352			379,307			1,191,764			1,015,794

Gross contract costs		(23,464	)		(575	)		(62,180	)		(3,890	)
Total segment fee revenue		413,888			378,732			1,129,584			1,011,904

Operating expenses:
Compensation, operating and administrative expenses		383,964			332,831			1,067,768			908,736
Depreciation and amortization		10,748			9,325			31,129			28,793
Total segment operating expenses		394,712			342,156			1,098,897			937,529

Gross contract costs		(23,464	)		(575	)		(62,180	)		(3,890	)
Total fee-based segment operating expenses		371,248			341,581			1,036,717			933,639

Operating income	$	42,640			37,151			92,867			78,265

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Continued: Summarized unaudited financial information by business segment for the three and nine months ended September 30, 2012 and 2011 is as follows ($ in thousands):

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2012			2011			2012			2011
Real Estate Services
EMEA
Segment revenue:
Revenue	$	234,410			247,298			696,906			633,720
Equity in (losses) earnings		(158	)		4			(228	)		(306	)
Total segment revenue		234,252			247,302			696,678			633,414

Gross contract costs		(26,330	)		(19,602	)		(79,294	)		(63,137	)
Total segment fee revenue		207,922			227,700			617,384			570,277

Operating expenses:
Compensation, operating and administrative expenses		225,124			236,855			673,217			619,136
Depreciation and amortization		4,759			9,824			16,643			20,326
Total segment operating expenses		229,883			246,679			689,860			639,462

Gross contract costs		(26,330	)		(19,602	)		(79,294	)		(63,137	)
Total fee-based segment operating expenses		203,553			227,077			610,566			576,325

Operating income (loss)	$	4,369			623			6,818			(6,048	)

Asia Pacific
Segment revenue:
Revenue	$	206,272			200,536			597,147			580,362
Equity in earnings		47			56			161			151
Total segment revenue		206,319			200,592			597,308			580,513

Gross contract costs		(21,893	)		(26,577	)		(67,772	)		(76,563	)
Total segment fee revenue		184,426			174,015			529,536			503,950

Operating expenses:
Compensation, operating and administrative expenses		191,026			183,563			555,446			530,311
Depreciation and amortization		3,143			3,128			9,556			9,202
Total segment operating expenses		194,169			186,691			565,002			539,513

Gross contract costs		(21,893	)		(26,577	)		(67,772	)		(76,563	)
Total fee-based segment operating expenses		172,276			160,114			497,230			462,950

Operating income	$	12,150			13,901			32,306			41,000

Investment Management
Segment revenue:
Revenue	$	71,588			76,103			198,232			209,158
Equity in earnings		10,678			420			22,644			171
Total segment revenue		82,266			76,523			220,876			209,329

Operating expenses:
Compensation, operating and administrative expenses		57,616			56,741			158,104			163,555
Depreciation and amortization		439			558			1,382			2,179
Total segment operating expenses		58,055			57,299			159,486			165,734

Operating income	$	24,211			19,224			61,390			43,595

Segment Reconciling Items:
Total segment revenue	$	960,189			903,724			2,706,626			2,439,050
Reclassification of equity in earnings (losses)		10,698			514			22,500			2,682
Total revenue		949,491			903,210			2,684,126			2,436,368

Total segment operating expenses before restructuring charges		876,819			832,825			2,513,245			2,282,238
Restructuring charges		6,820			16,031			32,376			22,144
Operating income	$	65,852			54,354			138,505			131,986

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(5)	Business Combinations, Goodwill and Other Intangible Assets

2012 Business Combinations Activity

In the first nine months of 2012, we paid $26.2 million for acquisitions consisting of $13.9 million for three new acquisitions and $12.3 million for contingent earn-out consideration for acquisitions completed in prior years. We also paid $31.7 million to satisfy deferred acquisition obligations, primarily for the 2011 King Sturge acquisition.

In the first nine months of 2012, we completed three acquisitions: (1) MPS an Australian tenant advisory firm, (2) 360 Commercial Partners, an Orange County, California based real estate services firm that specializes in industrial sales and leasing, and (3) Credo Real Estate, a Singapore-based real estate advisory firm specializing in collective and residential sales, valuations, auctions, research and consultancy. Terms of these acquisitions included: (1) cash paid at closing, net of cash acquired, of $13.9 million, (2) consideration subject only to the passage of time recorded as Deferred business acquisition obligations at a current fair value of $3.8 million, and (3) additional consideration subject to earn-out provisions that will be paid only if certain conditions are achieved, recorded as current and long-term liabilities, at their estimated fair value of $6.5 million. These acquisitions resulted in goodwill of $25.1 million, and identifiable intangibles of $1.4 million.

During the six months ended June 30, 2012, we finalized the purchase price allocation of the net assets acquired in the 2011 King Sturge acquisition, resulting in $3.5 million of additional goodwill.

Earn-Out Payments

At September 30, 2012, we had the potential to make earn-out payments on 14 acquisitions that are subject to the achievement of certain performance conditions. The maximum amount of the potential earn-out payments for these acquisitions was $148.0 million at September 30, 2012. Assuming the achievement of the applicable performance conditions, we anticipate that the majority of these earn-out payments will come due by the end of 2013, with the remaining payments coming due at various times through 2015.

Approximately $127.4 million of these potential earn-out payments are the result of acquisitions completed prior to the adoption of the fair value requirements for contingent consideration under ASC 805, “Business Combinations,” and thus will be recorded as additional purchase consideration if and when the contingency is met. Changes in the estimated fair value of the remaining $20.6 million of potential earn-out payments will result in increases or decreases in Operating, administrative and other expenses in our consolidated statements of comprehensive income (loss). The fair value of these contingent payments is based on discounted cash flow models that reflect our projection of operating results of each respective acquisition and are based on Level 3 inputs in the fair value hierarchy.

Goodwill and Other Intangible Assets

We have $1.9 billion of unamortized intangibles and goodwill as of September 30, 2012. A significant portion of these unamortized intangibles and goodwill are denominated in currencies other than U.S. dollars, which means that a portion of the movements in the reported book value of these balances is attributable to movements in foreign currency exchange rates. The tables below detail the foreign exchange impact on our intangible and goodwill balances. Of the $1.9 billion of unamortized intangibles and goodwill: (1) goodwill of $1.8 billion with indefinite useful lives is not amortized, (2) identifiable intangibles of $38.7 million will be amortized over their remaining finite useful lives, and (3) $9.0 million of identifiable intangibles with indefinite useful lives is not amortized.

The following table details, by reporting segment, the current year movements in goodwill with indefinite useful lives ($ in thousands):

	Real Estate Services
						Asia		Investment
	Americas			EMEA		Pacific		Management		Consolidated
Gross Carrying Amount
Balance as of January 1, 2012	$	922,301			592,634		217,434		18,838		1,751,207
Additions, net of adjustments		8,302			9,143		23,865		-		41,310
Impact of exchange rate movements		(44	)		20,505		3,203		763		24,427
Balance as of September 30, 2012	$	930,559			622,282		244,502		19,601		1,816,944

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The following table details, by reporting segment, the current year movements in the gross carrying amount and accumulated amortization of our identifiable intangibles ($ in thousands):

	Real Estate Services
							Asia			Investment
	Americas			EMEA			Pacific			Management			Consolidated
Gross Carrying Amount
Balance as of January 1, 2012	$	87,077			44,107			12,419			8,788			152,391
Additions		3,474			-			1,166			-			4,640
Adjustment for fully amortized intangibles		-			(3,700	)		-			-			(3,700	)
Impact of exchange rate movements		(8	)		2,008			181			316			2,497
Balance as of September 30, 2012	$	90,543			42,415			13,766			9,104			155,828

Accumulated Amortization
Balance as of January 1, 2012	$	(64,662	)		(24,104	)		(10,887	)		(148	)		(99,801	)
Amortization expense		(5,318	)		(4,442	)		(977	)		-			(10,737	)
Adjustment for fully amortized intangibles		-			3,700			-			-			3,700
Impact of exchange rate movements		9			(1,106	)		(148	)		-			(1,245	)
Balance as of September 30, 2012	$	(69,971	)		(25,952	)		(12,012	)		(148	)		(108,083	)

Net book value as of September 30, 2012	$	20,572			16,463			1,754			8,956			47,745

The following table shows the remaining estimated future amortization expense for our identifiable intangibles with finite useful lives at September 30, 2012 ($ in thousands):

2012 (3 months)	$	3,306
2013		8,941
2014		8,057
2015		6,501
2016		3,044
2017		2,486
Thereafter		6,406
Total	$	38,741

(6)	Investments in Real Estate Ventures

As of September 30, 2012, we had total investments in real estate ventures of $295.5 million that we account for primarily under the equity method of accounting. Our investments are primarily co-investments in approximately 40 separate property or fund co-investments for which we also have an advisory agreement. Our ownership percentages in these investments generally range from less than 1% to 15%.

We utilize two investment vehicles to facilitate the majority of our co-investment activity when we do not invest directly into a real estate venture. LaSalle Investment Company I (“LIC I”) is our investment vehicle for substantially all co-investment commitments made through December 31, 2005. LIC I is fully committed to underlying real estate ventures. At September 30, 2012, our maximum potential unfunded commitment to LIC I is $4.8 million (€3.7 million). LaSalle Investment Company II (“LIC II”) is our investment vehicle for substantially all co-investment commitments made after December 31, 2005. At September 30, 2012, LIC II has unfunded capital commitments to the underlying funds of $186.9 million, of which our 48.78% share is $91.2 million. The $91.2 million commitment is part of our maximum potential unfunded total commitment to LIC II at September 30, 2012 of $153.0 million. Exclusive of our LIC I and LIC II commitment structures, we have other potential unfunded commitment obligations, the maximum of which is $38.0 million as of September 30, 2012.

LIC I and LIC II invest in certain real estate ventures that own and operate commercial real estate. We have an effective 47.85% ownership interest in LIC I, and an effective 48.78% ownership interest in LIC II; primarily institutional investors hold the remaining 52.15% and 51.22% interests in LIC I and LIC II, respectively. Additionally, a non-executive Director of Jones Lang LaSalle is an investor in LIC I on equivalent terms to other investors.

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LIC I’s and LIC II’s exposures to liabilities and losses of the ventures are limited to their existing capital contributions and remaining capital commitments. We expect that LIC I will draw down on our remaining commitment over the next one to two years to satisfy its existing commitments to underlying funds, and we expect that LIC II will draw down on our commitment over the next four to eight years as it enters into new commitments. Our Board of Directors has approved the use of our co-investment capital in particular situations to control existing real estate assets or portfolios to seed future investments within LIC II.

As of September 30, 2012, LIC II maintains a $60.0 million revolving credit facility (the “LIC II Facility”), principally for working capital needs. The LIC II Facility contains a credit rating trigger and a material adverse condition clause. If either the credit rating trigger or the material adverse condition clause becomes triggered, the facility would be in default and outstanding borrowings would need to be repaid. Such a condition would require us to fund our pro-rata share of the then outstanding balance on LIC II, which is the limit of our liability. The maximum exposure to Jones Lang LaSalle, assuming that the LIC II Facility was fully drawn, would be $29.3 million. The exposure is included within and cannot exceed our maximum potential unfunded commitment to LIC II of $153.0 million. As of September 30, 2012, LIC II had $48.1 million of outstanding borrowings on the facility.

Our investments in real estate ventures include investments in entities classified as variable interest entities (“VIEs”) that we analyze for potential consolidation. We had investments of $10.7 million and $22.3 million at September 30, 2012 and December 31, 2011, respectively, in entities classified as VIEs. We evaluate each of these VIEs to determine whether we might have the power to direct the activities that most significantly impact the entity’s economic performance. In each case, we determined that we either (a) did not have the power to direct the key activities or (b) shared power with investors, lenders, or other actively-involved third parties. Additionally, our exposure to loss in these VIEs is limited to the amount of our investment in the entities. Therefore, we concluded that we would not be deemed to (1) have a controlling financial interest in or (2) be the primary beneficiary of these VIEs. Accordingly, we do not consolidate these VIEs in our consolidated financial statements.

Impairment

We review our investments in real estate ventures that are accounted for under the equity method of accounting on a quarterly basis for indications of (1) whether the carrying value of the real estate assets underlying our investments in real estate ventures may not be recoverable or (2) whether our equity in these investments is other than temporarily impaired. When events or changes in circumstances indicate that the carrying amount of a real estate asset underlying one of our investments in real estate ventures may be impaired, we review the recoverability of the carrying amount of the real estate asset in comparison to an estimate of the future undiscounted cash flows expected to be generated by the underlying asset. When the carrying amount of the real estate asset is in excess of the future undiscounted cash flows, we use a discounted cash flow approach to determine the fair value of the asset in computing the amount of the impairment. Equity in earnings (losses) from real estate ventures included impairment charges of $1.5 million and $2.3 million, for the three months ended September 30, 2012 and 2011, respectively, and $5.9 million and $5.2 million, for the nine months ended September 30, 2012 and 2011, respectively, representing our share of the impairment charges against individual assets held by our real estate ventures.

Fair Value

Starting in the third quarter of 2011, we elected the fair value option, in the ordinary course of business at the time of the initial investment, for certain investments in real estate ventures because we believe the fair value accounting method more accurately represents the value and performance of these investments. At September 30, 2012 and December 31, 2011, we had $97.0 million and $35.9 million, respectively, of investments that were accounted for under the fair value method. For investments in real estate ventures for which the fair value option has been elected, we increase or decrease our investment each reporting period by the change in the fair value of these investments. These fair value adjustments are reflected as gains or losses in our consolidated statements of comprehensive income (loss) within Equity in earnings (losses) from real estate ventures. For the three and nine months ended September 30, 2012 we recognized fair value gains of $1.6 million and $0.4 million, respectively, and no fair value adjustments were recognized during the three and nine months ended September 30, 2011. The fair value of these investments is based on discounted cash flow models and other assumptions that reflect our outlook for the commercial real estate market relative to these real estate assets and is primarily based on inputs that are Level 3 inputs in the fair value hierarchy. See Note 9, Fair Value Measurements, for further detail on our fair value accounting.

The following table shows the current year movements in our investments in real estate ventures that are accounted for under the fair value accounting method ($ in thousands):

Fair value investments as of January 1, 2012	$	35,872
Investments		88,178
Distributions		(3,883	)
Net fair value gain		397
Foreign currency translation adjustments, net		808
Fair value investments as of September 30, 2012	$	121,372

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(7)	Stock-based Compensation

Restricted Stock Unit Awards

Along with cash based-salaries and performance-based annual cash incentive awards, restricted stock unit awards represent a primary element of our compensation program for Company officers, managers and professionals.

Historically a significant portion of restricted stock units granted each year have been granted in the first quarter of the year under our Stock Ownership Program (the “SOP”). The SOP generally required that from 10% to 20% of incentive compensation (or “bonus”) of our senior-most 5% of employees be deferred and delivered in restricted stock units. Under the SOP plan we have granted approximately 365,000, 212,000 and 297,000 shares of restricted stock in the first quarters of 2012, 2011 and 2010, respectively. In the second quarter of 2012, we terminated the SOP in connection with incentive compensation payments for 2012 performance, and no additional restricted stock units will be issued under the SOP. Since the start of the SOP, our employee population has grown significantly and other aspects of our compensation programs have evolved, as a result of which we have determined that (1) there are other more targeted and strategic approaches we can take in order to enhance our equity incentive compensation programs, and (2) we can do so in a way that will be less dilutive to shareholders than the SOP would be if we continued this plan. We anticipate that the termination of the SOP will significantly change the timing and number of restricted stock units granted annually starting in 2013.

Restricted stock unit activity for the three months ended September 30, 2012 is as follows:

				Weighted Average		Weighted Average	Aggregate
	Shares			Grant Date		Remaining	Intrinsic Value
	(thousands)			Fair Value		Contractual Life	($ in millions)
Unvested at July 1, 2012		1,710.5		$	68.49
Granted		15.6			70.56
Vested		(356.9	)		69.34
Forfeited		(16.2	)		63.56
Unvested at September 30, 2012		1,353.0		$	68.35	2.22 years	$	95.9
Unvested shares expected to vest		1,310.9		$	68.38	2.22 years	$	93.0

Restricted stock unit activity for the nine months ended September 30, 2012 is as follows:

				Weighted Average		Weighted Average	Aggregate
	Shares			Grant Date		Remaining	Intrinsic Value
	(thousands)			Fair Value		Contractual Life	($ in millions)
Unvested at January 1, 2012		1,362.3		$	66.29
Granted		592.8			67.08
Vested		(574.3	)		62.14
Forfeited		(27.8	)		68.70
Unvested at September 30, 2012		1,353.0		$	68.35	2.22 years	$	95.9
Unvested shares expected to vest		1,310.9		$	68.38	2.22 years	$	93.0

We determine the fair value of restricted stock units based on the market price of the Company’s common stock on the grant date. As of September 30, 2012, we had $37.0 million of remaining unamortized deferred compensation related to unvested restricted stock units. We will recognize the remaining cost of unvested restricted stock units outstanding at September 30, 2012 over varying periods into 2017.

Shares vesting during the three months ended September 30, 2012 and 2011 had grant date fair values of $24.7 million and $31.4 million, respectively. Shares vesting during the nine months ended September 30, 2012 and 2011 had grant date fair values of $35.7 million and $49.6 million, respectively.

Other Stock Compensation Programs

The Jones Lang LaSalle Savings Related Share Option Plan (“Save As You Earn” or “SAYE”) is for eligible employees of our United Kingdom and Ireland based operations. Under this plan, employees make an annual election to contribute to the plan to purchase stock at a 15% discount from the market price at the beginning of the plan’s three and five year vesting periods. In June 2012, we issued approximately 127,400 options under the SAYE plan at an exercise price of $59.26. In March 2011, we issued approximately 17,000 options at an exercise price of $83.72. No options were issued in the third quarter of 2012. At September 30, 2012, there were approximately 240,200 options outstanding under the SAYE plan.

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(8)	Retirement Plans

We maintain five contributory defined benefit pension plans in the United Kingdom, Ireland and Holland to provide retirement benefits to eligible employees. It is our policy to fund the minimum annual contributions required by applicable regulations. We use a December 31st measurement date for our plans. Net periodic pension cost consisted of the following for the three and nine months ended September 30, 2012 and 2011 ($ in thousands):

	Three Months			Three Months			Nine Months			Nine Months
	Ended			Ended			Ended			Ended
	September 30,			September 30,			September 30,			September 30,
	2012			2011			2012			2011

Employer service cost - benefits earned during the period	$	986			1,302			2,970			2,947
Interest cost on projected benefit obligation		3,538			4,700			10,605			10,256
Expected return on plan assets		(4,321	)		(5,952	)		(12,941	)		(12,709	)
Net amortization of deferrals		524			317			1,569			953
Recognized actuarial loss		39			56			117			168
Net periodic pension cost	$	766			423			2,320			1,615

The expected return on plan assets, included in net periodic pension cost, is based on forecasted long-term rates of return on plan assets of each individual plan; expected returns range from 5.4% to 7.0%.

For the three and nine months ended September 30, 2012, we made payments of $3.5 million and $8.1 million, respectively, to these plans. We expect to contribute an additional $4.2 million to these plans in the last three months of 2012, for a total of $12.3 million in 2012. We made $19.8 million of contributions to these plans in 2011, including $11.8 million of contributions to the plan acquired from King Sturge in May 2011.

(9)	Fair Value Measurements

ASC 820, “Fair Value Measurements and Disclosures,” establishes a framework for measuring fair value in generally accepted accounting principles and establishes the following three-tier fair value hierarchy:

Level 1. Observable inputs such as quoted prices for identical assets or liabilities in active markets;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

We regularly use foreign currency forward contracts to manage our currency exchange rate risk related to intercompany lending and cash management practices. We determine the fair value of these contracts based on current market rates at each balance sheet date. The inputs for these valuation techniques are primarily Level 2 inputs. At September 30, 2012, these forward exchange contracts had a gross notional value of $1.6 billion ($720.2 million on a net basis) and were recorded on our consolidated balance sheet as a current asset of $5.4 million and a current liability of $5.8 million. At December 31, 2011, these forward exchange contracts had a gross notional value of $1.7 billion ($758.2 million on a net basis) and were recorded on our consolidated balance sheet as a current asset of $4.2 million and a current liability of $5.6 million. The revaluations of our foreign currency forward contracts resulted in net losses of $0.4 million and $14.5 million for the three months ended September 30, 2012 and 2011, respectively. Gains and losses from the revaluation of these contracts are recognized as a component of Operating, administrative and other expense and are offset by the gains and losses recognized on the revaluation of intercompany loans and other foreign currency balances such that the net impact to earnings was not significant.

We maintain a deferred compensation plan for certain of our U.S. employees that allows them to defer portions of their compensation. The values of the assets and liabilities of this plan are determined based on the returns of certain mutual funds and other securities. The inputs for these valuations are primarily Level 2 inputs in the fair value hierarchy. This plan is recorded on our consolidated balance sheet at September 30, 2012 as Other long-term assets of $48.6 million, Other long-term liabilities of $57.0 million, and as a reduction of equity, Shares held in trust, of $7.6 million. This plan is recorded on our consolidated balance sheet at December 31, 2011 as Other long-term assets of $39.1 million, Other long-term liabilities of $46.7 million, and as a reduction of equity, Shares held in trust, of $7.8 million.

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See Note 6, Investments in Real Estate Ventures, for fair value measurements relating to our investments in real estate ventures. Also, see Note 5, Business Combinations, Goodwill and Other Intangible Assets, for fair value measurements related to our earn-out obligations that are valued based on the fair value requirements for contingent consideration under ASC 805, “Business Combinations.”

Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, receivables, accounts payable, short-term borrowings, borrowings under our credit facility, borrowings under our Warehouse facilities and foreign currency forward contracts. The carrying values of cash and cash equivalents, receivables, accounts payable, short-term borrowings and borrowings under our Warehouse facilities approximate their estimated fair values due to the short maturity of these instruments. We record warehousing receivables at fair value based on the commitment price, in accordance with ASC 948, Financial Services—Mortgage Banking.

The estimated fair value of our borrowings under our credit facility approximates their carrying value due to their variable interest rate terms. The fair value of our foreign currency forward contracts is disclosed above. At September 30, 2012, we have no recurring fair value measurements for financial assets and liabilities that are based on unobservable inputs or Level 3 inputs.

(10)

Debt

We have a $1.1 billion unsecured revolving credit facility (the “Facility”) that matures in June 2016. We had $572.0 million and $463.0 million outstanding under the Facility, at September 30, 2012 and December 31, 2011, respectively. At September 30, 2012 we had the capacity to borrow up to an additional $510.7 million under the Facility. The average outstanding borrowings under the Facility were $712.0 million and $600.0 million during the three months ended September 30, 2012 and 2011, respectively, and $678.0 million and $421.5 million during the nine months ended September 30, 2012 and 2011, respectively.

The pricing on the Facility ranges from LIBOR plus 112.5 basis points to LIBOR plus 225.0 basis points. As of September 30, 2012, pricing on the Facility was LIBOR plus 137.5 basis points. The effective interest rate on our debt was 1.6%, during both the three months ended September 30, 2012 and 2011, respectively, and 1.6% and 1.8%, during the nine months ended September 30, 2012 and 2011, respectively.

We remain in compliance with all covenants under our Facility as of September 30, 2012. The Facility requires us to maintain a leverage ratio that does not exceed 3.50 to 1 through September 2013 and 3.25 to 1 thereafter, and a minimum cash interest coverage ratio of 3.00 to 1.

In addition to our Facility, we have the capacity to borrow up to an additional $46.7 million under local overdraft facilities. We had short-term borrowings (including capital lease obligations and local overdraft facilities) of $30.8 million and $65.1 million at September 30, 2012 and December 31, 2011, respectively, of which $24.8 million and $38.7 million at September 30, 2012 and December 31, 2011, respectively, was attributable to local overdraft facilities.

(11)	Earnings Per Share and Net Income Attributable to Common Shareholders

We calculate earnings per share by dividing net income attributable to common shareholders by weighted average shares outstanding. To calculate net income attributable to common shareholders, we subtract dividend-equivalents (net of tax) paid on outstanding but unvested shares of restricted stock units from net income in the period the dividend is declared. Included in the calculations of net income attributable to common shareholders are dividend-equivalents of $0.3 million and $0.2 million net of tax, for the nine months ended September 30, 2012 and 2011, respectively.

The difference between basic weighted average shares outstanding and diluted weighted average shares outstanding is the dilutive impact of common stock equivalents. Common stock equivalents consist of shares to be issued under employee stock compensation programs.

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The following table details the calculations of basic and diluted earnings per common share for the three and nine months ended September 30, 2012 and 2011 ($ in thousands, except per share amounts):

	Three Months		Three Months		Nine Months			Nine Months
	Ended		Ended		Ended			Ended
	September 30,		September 30,		September 30,			September 30,
	2012		2011		2012			2011

Net income attributable to the Company	$	49,513		33,880		100,978			79,466
Dividends on unvested common stock, net of tax benefit		-		-		253			236
Net income attributable to common shareholders	$	49,513		33,880		100,725			79,230

Basic weighted average shares outstanding		44,015,922		43,421,666		43,780,819			43,069,567
Basic income per common share before dividends on unvested common stock		1.12		0.78		2.31			1.85
Dividends on unvested common stock, net of tax benefit		-		-		(0.01	)		(0.01	)
Basic earnings per common share	$	1.12		0.78		2.30			1.84

Diluted weighted average shares outstanding		44,826,502		44,355,453		44,755,817			44,376,796
Diluted income per common share before dividends on unvested common stock	$	1.10		0.76		2.26			1.80
Dividends on unvested common stock, net of tax benefit		-		-		(0.01	)		(0.01	)
Diluted earnings per common share	$	1.10		0.76		2.25			1.79

(12)	Commitments and Contingencies

We are a defendant in various litigation matters arising in the ordinary course of business, some of which involve claims for damages that are substantial in amount. Many of these litigation matters are covered by insurance (including insurance provided through a captive insurance company), although they may nevertheless be subject to large deductibles and the amounts being claimed may exceed the available insurance. Although the ultimate liability for these matters cannot be determined, based upon information currently available, we believe the ultimate resolution of such claims and litigation will not have a material adverse effect on our financial position, results of operations or liquidity.

In order to better manage our global insurance program and support our risk management efforts, we supplement our traditional insurance coverage for certain types of claims by using a wholly-owned captive insurance company. The level of risk retained by our captive insurance company, with respect to professional indemnity claims, is up to $2.5 million per claim.

When a potential loss event occurs, management estimates the ultimate cost of the claim and accrues the related cost when probable and estimable. The accrual for professional indemnity insurance claims facilitated through our captive insurance company which relates to multiple years was $0.8 million and $0.7 million, net of receivables, as of September 30, 2012 and December 31, 2011, respectively.

(13)	Restructuring and Acquisition Charges

For the three and nine months ended September 30, 2012, we recognized $6.8 million and $32.4 million, respectively, of restructuring and acquisition integration costs consisting of (1) severance, (2) King Sturge employee retention bonuses, (3) lease exit charges, and (4) other acquisition and information technology integration costs.

For the three and nine months ended September 30, 2011, we recognized $16.0 million and $22.1 million, respectively, of restructuring and acquisition integration costs related to the King Sturge acquisition.

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The following table shows the restructuring and acquisition accrual activity, and the related payments made during the nine months ended September 30, 2012 and 2011 ($ in thousands):

										Other
				Retention			Lease			Acquisition
	Severance			Bonuses			Exit			Costs			Total
January 1, 2012	$	11,712			7,555			7,912			4,778			31,957
Accruals		4,227			7,552			8,227			12,370			32,376
Fixed asset disposals		-			-			-			(1,799	)		(1,799	)
Payments made		(11,209	)		(6,465	)		(2,192	)		(12,856	)		(32,722	)
September 30, 2012	$	4,730			8,642			13,947			2,493			29,812

									Other
				Retention			Lease		Acquisition
	Severance			Bonuses			Exit		Costs		Total
January 1, 2011	$	4,267			-			546		-		4,813
Accruals		834			9,102			5,047		7,161		22,144
Payments made		(3,913	)		(1,148	)